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GM Electric Vehicle Plans Could Get A Big Boost With Its New Chevy Bolt EV

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General Motors announced the new version of Chevrolet Bolt EV, its electric car. The vehicle has a starting MSRP of $37,495 and has an EPA-estimated range of 238 miles on a single charge. This is a significant piece of news for GM investors as it signals that the company is making rapid progress in battery technology used in electric vehicles. This is made clear by contrasting the new Bolt EV with its predecessors and competitors. The plug-in version of the Volt has a starting MSRP of $33,220 and has a range of 53 miles before range extended operation, enabling a total of approximately 420 miles on a full charge and full tank of fuel. Nissan’s Leaf sells for a price of around $29,000 and has a range of 107 miles. Tesla’s 2017 slated Model 3 is expected to sell for $35,000 and will have a range of 215 miles. The vehicle should be considered an extremely important step for the company in terms of its strategy for the auto market going forward.

As the first truly mass-market all-electric vehicle, the Chevrolet Bolt EV will present some interesting challenges. Given the structure of the U.S. auto industry, major auto manufacturers design, assemble and distribute vehicles through local dealerships. Pricing at both tiers is complex and involves various discounts and incentives to both dealers and consumers. And warranty and non-warranty service by the dealer is a significant component in this economic set-up. Yet a key feature of electric vehicles is the fact that they lack the mechanical complexity of ICE (i.e., Internal Combustion Engine) vehicles and require significantly less maintenance and service. And for they dealer, they have to offer less potential profit. The upshot is that there is less incentive for dealerships to convince potential buyers to purchase electric vehicles as they stand to make less of a profit on those sales.

On a year-to-date basis in 2016, the Chevrolet Volt is the second highest selling electric vehicle in the U.S. auto market behind Tesla’s Model S. However, compared on a year-over-year basis, sales of the vehicle are up 76%. Still, these sales levels are extremely low in terms of units, as can be seen in the table above. The Volt is a sedan and competes with highly successful cars, including Honda’s Civic and Accord, Toyota’s Camry and Corolla, and GM’s Chevrolet Malibu and Ford’s Fusion. It thus is possible that the eventual size of the market in terms of unit sales for the vehicle could be around 250,000-300,000 units each year, if it attains truly mass market status.

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